CL Colgate Palmolive Co

Factors Include Volatility, Valuations, Interest Rates and Earnings Growth NEW YORK, April 11 /PRNewswire/ -- In the Q1 2006 edition of Quality Trends, Standard & Poor's Equity Research Services points out several factors that could lead to outperformance by high Quality Ranking stocks. Quality Trends, co-authored by Standard & Poor's analysts, Massimo Santicchia and Richard Tortoriello, is Standard & Poor's Equity Research's quarterly sourcebook for investors interested in "high-quality" stocks, as ranked by S&P's proprietary Quality Ranking system. A number of factors, when combined, lead Standard & Poor's Equity Research to forecast a rotation towards high Quality Ranking (QR) stocks in the U.S. equity markets. One of the most significant factors cited by the authors is the rising amount of risk investors are currently willing to take, as measured by The Chicago Board Options Exchange Volatility Index and other risk-oriented indices, in their search for higher returns. The Index is at lows not seen since late 1994. February 1995 marked the beginning of a nearly five-year cycle of high quality outperformance. Additionally, the authors point out that valuations of low Quality Ranking stocks vis-a-vis high QR stocks have reached levels, which have historically preceded a rotation to high QR issues. For example, on a price-to-earnings basis, low QR stocks are now selling at a significant premium to high QR issues, versus an historical discount. "We believe that investors' risk tolerance has reached an extreme, which has historically resulted in a reversal in investor sentiment, followed by a cycle of outperformance by high QR stocks," said Massimo Santicchia, co-author of Quality Trends. "In addition to investor risk tolerance, other macro economic factors could create headwinds for low Quality Ranking companies." "We also expect rising interest rates and slowing corporate profit growth to result in a rotation toward high QR issues. Higher rates mean increased economic and company-specific risk, while slowing overall profit growth increases the attractiveness of high QR issues, which tend to have more consistent earnings in both up and down economic cycles," said Richard Tortoriello, S&P Equity Research Analyst and co-author of Quality Trends. Stocks that S&P Equity Research currently accords an "A+" Quality Ranking and a "5-STARS," or "Strong Buy," by the covering S&P equity analyst include: Automatic Data Processing (NYSE:ADPNYSE:$46), Capital One Financial (NYSE:COFNYSE: $84), Citigroup (NYSE:CNYSE:$48), Colgate-Palmolive (NYSE:CLNYSE:$57), Home Depot (NYSE:HDNYSE:$42), Johnson & Johnson (NYSE:JNJNYSE:$58), PepsiCo (NYSE:PEPNYSE:$58), SunTrust Banks (NYSE:STINYSE:$74), UnitedHealth Group (NYSE:UNHNYSE:$52), Wal-Mart Stores (NYSE:WMTNYSE:$46), and Wrigley (Wm.), Jr. (NYSE:WWYNYSE:$60). Standard & Poor's Equity Research has been providing S&P Quality Rankings on common stocks since 1956. The rankings, which range from A+ (highest) to D (liquidation), reflect the relative record of a company's growth and consistency in earnings and dividends over a trailing 10 year period. Readers should note that past performance is not necessarily a valid indicator of future results. A copy of the report can be obtained from Brian McGovern, Standard & Poor's equity research sales, at 212-438-4654 or, by email, at . About Standard & Poor's Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With approximately 6,300 employees located in 21 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/. About Standard & Poor's Equity Research Services As the world's largest producer of independent equity research, over 1,000 institutions license Standard & Poor's research for their investors and advisors, including 19 of the top 20 securities firms, 13 of the top 20 banks, and 11 of the top 20 life insurance companies. Standard & Poor's team of 100 experienced U.S., European and Asian equity analysts use a fundamental, bottom-up approach to assess a global universe of approximately 2,000 equities across more than 120 industries worldwide. Follow Standard & Poor's equity analysts' US market commentary each day at http://www.equityresearch.standardandpoors.com/. The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's. Standard & Poor's does not trade on its own account. The analytical and ethical conduct of Standard & Poor's equity analysts is governed by the firm's Research Objectivity Policy, a copy of which may also be found at http://www.standardandpoors.com/. DATASOURCE: Standard & Poor's CONTACT: Edward Sweeney, Communications Tel.: 212-438-6634 Web site: http://www.standardandpoors.com/ http://www.equityresearch.standardandpoors.com/

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